Shortened week ends without new deals; sharp decline in issuance coming; Apache notes firm

By Andrea Heisinger and Cristal Cody

New York, April 5 - The shortened holiday week had less than the predicted $15 billion of issuance as of the close on Thursday, which contrasted with previous weeks that topped estimates.

According to data compiled by Prospect News, issuers priced $14.15 billion in 18 deals during the first part of the week. The bond market is technically open until noon ET on Friday, but no one is expected to get any deals done.

The tone remained soft Thursday following a Wednesday where only one bond offering priced and other potential issuers stood down on a weakened tone.

Issuance in the coming week is seen as a "sharp decrease," a source at a large syndicate desk said.

The estimate was $5 billion to $10 billion and "more corporate heavy than fig [financial] heavy."

"We won't have as many issuers in the market," the source said.

Part of the reason is some companies entering earnings blackout, and the market in general was saturated with new deals in the first quarter.

Another syndicate source pegged the coming week as having $10 billion to $15 billion of deals but "leaning toward the lower end" of the range.

The decrease in deals also stems from a weaker tone in the market with negative headlines coming out of Europe and the "market feeling tired after a large Q1," the second syndicate source said.

Bonds overall widened in the light trading flows. The Markit CDX Series 18 North American Investment Grade index eased 4 basis points to a spread of 97 bps on the day.

Apache Corp.'s notes due 2022 tightened in light trading on Thursday.

Investment-grade bank and brokerage credit default swap costs widened on Thursday.

Banks widened 4 bps to 20 bps. Citi's CDS costs traded 20 bps wider at 230 bps bid, 240 bps offered.

Brokers widened 13 bps to 18 bps. Merrill Lynch's CDS costs were 18 bps wider at 277 bps bid, 298 bps offered.

Morgan Stanley's CDS costs traded 18 bps wider at 348 bps bid, 358 bps offered. Goldman Sachs' CDS costs widened 13 bps to 255 bps bid, 265 bps offered.

Treasuries ended better on euro debt default fears. The benchmark 10-year note yield fell 4 bps to 2.18%. The 30-year bond yield dropped to 3.32% from 3.36%.

Apache active

Apache's 3.25% notes due 2022 firmed to 93 bps bid on Thursday from 97 bps bid, 92 bps offered the previous day, a source said. The company priced $1.1 billion of the 10-year notes at 100 bps over Treasuries on Wednesday.

The company's 4.75% bonds due 2043 were seen at 136 bps bid. Apache sold $1.5 billion of the bonds at Treasuries plus 135 bps on Wednesday.

The two issues priced as part of a $3 billion three-tranche offering of notes (A3/A-/A-).

The Houston-based energy company explores for, transports and produces natural gas, crude oil and natural gas liquids.

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